Chemical Bank completed its "merger of equals" with TCF Bank on Thursday, assuming the TCF brand in becoming the largest Michigan-based bank — one that's got its eyes open for the next acquisition and is aiming to go head-to-head with national banks for commercial banking business in metro Detroit.

"We want to be acquisition-ready," David Provost, the new executive vice chairman of TCF Financial Corp., said in an exclusive interview with Crain's.

The new Detroit-based TCF Bank, which has $47 billion in assets and $35 billion in deposits, becomes the 27th-largest bank in the country following Thursday's financial close of the $3.6 billion all-stock deal.

There will be little consolidation of public-facing operations because Michigan-based Chemical Bank and Minnesota-based TCF Bank have "very little overlap" in retail branches and commercial lending and leasing operations, said Craig Dahl, president and CEO of TCF Bank.

"We have virtually no overlap in commercial customers," Dahl said. "So we're not going to have to 'pick a team to survive.' All of our team are expected to survive — and that's a really exciting thing."

By joining forces, TCF Bank's new leadership team believes it will be better positioned to compete for retail and commercial banking business with larger national financial institutions.

"We're now going to be a nearly $50 billion company, which gives us a tremendous amount of power and opportunity to do more and more to serve the customers, to serve the communities and do what banks are supposed to do, which is uplift the opportunities for those customers," said Gary Torgow, the Chemical Bank chairman who becomes executive chairman of the new TCF Bank. "In the next two years, I think the public is going to see a much stronger combined franchise."

In Michigan, Chemical Bank had 6.03 percent of a $217 billion deposit market share as of June 30, 2018, making it the seventh-largest bank in the state overall based on deposits, according to Federal Deposit Insurance Corp. data.

At the time, TCF Bank had a 1.47 percent share of all federally insured deposits in Michigan, making it the 10th-largest bank based on deposits behind Providence, R.I.-based Citizens Bank (ninth) and Troy-based Flagstar Bank (eighth).

Annalise Frank/Crain's Detroit Business

The Chemical Bank comes to an end under Thursday's merger with TCF Bank.

When combined based on last year's deposits, TCF and Chemical would become the sixth-largest bank in the state, surpassing Columbus, Ohio-based Huntington National Bank. The top five banks by deposits are JPMorgan Chase & Co., Comerica Bank, Bank of America, PNC Bank and Fifth Third Bank, according to the FDIC.

'Complementary' merger

TCF Bank's presence in Southeast Michigan has largely centered on its Livonia-based TCF Equipment Finance subsidiary, which has grown from a $100 million business for TCF in 1999 to $5 billion annually, Dahl said.

The equipment finance and leasing operation of TCF fills a hole in Chemical Bank's business, which is largely build around retail banking, Torgow said.

Chemical Bank, founded in 1917 in Midland, brings a retail presence TCF lacked in Michigan, Ohio and Indiana that came as a result of Torgow and Provost's acquisition of 13 small banks — starting with Troy-based First Michigan Bank in 2007 — that morphed into Talmer Bancorp Inc. The Talmer Bank brand went away when the bank merged into Chemical Financial Corp. in July 2016 in a $1.1 billion cash-and-stock deal.

Gary Torgow

The newly combined TCF and Chemical banks expect to wring out $180 million in annual cost savings by combining information-technology systems, which would amount to a 40 percent reduction in IT costs, Dahl said.

"These two banks — Chemical and TCF — were so complementary with an opportunity," Torgow said. "And it makes so much sense to be able to get to that scale because the communities that you're serving can have such great benefit from it."

Detroit HQ nears groundbreaking

As the merger was going through the regulator and shareholder approvals, Chemical Bank's leaders were continuing their planning to build a 20-story high-rise headquarters building at Woodward and Elizabeth Street.

Neumann/Smith Architecture is the architect designing the office tower and construction bidding is underway, said Tom Shafer, the former Chemical Bank CEO who is moving into the president and chief operating officer position with the new TCF Bank. The new building should be constructed and ready to occupy by January 2022, Provost said. A groundbreaking ceremony is expected to take place as soon as next month, company leaders said.

"It's going to be a landmark building for the city of Detroit and we're excited to add to the skyline in that location," Shafer said.

Chemical plans to lease the new headquarters building from an entity tied to Detroit-based real estate company Sterling Group, which Torgow founded and is now owned and run by his sons. The company says he has not had an ownership stake in Sterling since 2009.

TCF plans to maintain its old headquarters in Wayzata, Minn., and the old Chemical Bank headquarters building in Midland.

The banking platforms and information technology systems of TCF and Chemical banks won't be merged until mid-2020, Shafer said. By mid-August, TCF customers will be able to use Chemical Bank ATMs for transactions and vice versa, he said.

Under the merger deal, which gained final approval of federal banking regulators on July 16, TCF Financial Corp. merged into Chemical Financial Corp., which took TCF's brand and holding company name.

TCF and Chemical's shareholders approved the merger on June 7. Each bank is retaining eight board members for a new 16-member of the TCF Financial Corp., chaired by Torgow.

The combined bank will be publicly traded on the Nasdaq Stock Market under the ticker symbol TCF. Chemical Bank was previously listed on the Nasdaq, while the old TCF's stock was traded on the New York Stock Exchange. Now TCF is switching to Chemical's stock exchange, while TCF is moving to Chemical's home state and Detroit headquarters.

"That's the beauty of a merger of equals," Provost said.

"It's consistent with how we've done every other thing," Dahl added with a laugh.